How major oil coys, dealers divert fuel in Oyo state

Despite warnings by the Department of Petroleum Resources (DPR) to sanction persons involved in sharp practices, dealers in Oyo State are currently engaged in ‘flying’, the local word for illegal diversion of petroleum products.

Findings by The Guardian showed that virtually all the major marketers are involved in the unwholesome act, with illicit profit running into billions of naira. Sometimes, the management at the headquarters of these unscrupulous officials and oil dealers are basically in the dark on the activities of their men.

When, for instance, a consignment of 15 trucks leave the depot of an oil major, regional officials deliver a nominal quantity and then divert the bulk to crooked dealers. The cost of a litre suffers an increase of about N25 in the process. The dealers, in turn, deliver the consignment to ready independent marketers, making another N25 profit on a litre. Finally, at a station, the price gets another N50 hike. With an additional N25-N70 raise by the station dealer, depending on the level of product scarcity, consumers are forced to pay an exorbitant N163-N200 per litre.

Explaining, a source said, “The major oil dealership stations are usually situated inside the city, where they receive supplies from the major oil companies. They pump only about 3000 litres into their tanks and fly the rest to stations outside the city, to avoid detection.”

Officials in the regional offices of major marketers also collect ‘tax’ of about N2-N3 per litre from dealers, especially when there is no fuel scarcity and flying becomes difficult to engage in. Some dealers said they have written petitions to the headquarters of some of the major oil marketers and expect a change, adding that almost all the staff of the oil majors are involved in the practice. Officials of these major marketers also shortchange consumers by increasing prices, even when there is no supply shortage in the state.

One dealer told The Guardian: “What they do is add to the price. Usually these are negligible amounts, like N2 to a litre. But when you add this up at the end of the day, it becomes something big. The worst part is that dealers are coerced into parting with these disagreeable fee or risk not getting supplies for weeks. And don’t forget that most of these businessmen, even if they have the best intentions, will pass the cost down to consumers.”

Investigations also revealed that rather than doing a thorough job, regional officials of the major oil marketers often carry out compromised inspections on their dealers.

“They would go to the dealers under the pretext of doing checks on them. When they get to any of the ‘friendly’ dealers, who are under-dispensing, they merely advise them to adjust their meters. And it ends there. They are in league with crooked dealers. And that is why consumers set out to buy 10 litres of fuel in some stations but end up getting only eight, or even less,” said one aggrieved dealer.

Insiders at the Ibadan depot of the NNPC said the facility is often sabotaged in order to make flying easier. Investigations by The Guardian found that the depot runs smoothly only for a few days and then breaks down.

“If the depot functions properly, it allows for easier monitoring of the supply chain. But if it is sabotaged, the products must come directly from Lagos and this is very difficult for officials to monitor. After smooth operation at the depot for about a week or two, something goes wrong and they have to suspend loading. They make sure they mess up the facilities. That is why the place is always breaking down,” said a source at the depot.

But a staff of the depot, who spoke on the condition of anonymity, said: “There is no reason for us to sabotage our own facilities. The machines here are ageing and people who vandalise and siphon products from the pipelines are our major headache. The security agents will have to tackle these challenges head on.”

The state’s Commissioner of Police, Leye Oyebade, confirmed that some people have been arrested in connection with the diversion of fuel. He, however, noted that the police have not recorded any fresh cases.

He said: “I have put together a team that deals with illegal diversion of petrol products and they have been able to clamp down on offenders. Some people who were arrested in the recent past are being prosecuted at the moment.”

Head of the Department of Petroleum Resources, in Oyo State, Engr. Olakunle Ogunlana, denied knowledge of the diversion of products in the state, saying his office has been up and doing, to prevent the practice. He, however, did not rule out the possible existence of the illegality, warning that people involved risk the seizure of their licenses, and could be fined the sum of N200,000 per litre on the volume diverted, meaning anyone caught diverting a 33,000-litre truck would pay N6.6m as fine into the Treasury Single Account of the Federal Government.

He said: “Currently, there is no loading of petroleum products at the Ibadan depot. Therefore, people bring in products from outside the state, especially Lagos. But these products have to be registered with our representatives in Ibadan, so that we have a record of all products brought into the state. After registering them, we dispatch them to their pre-determined destinations. We do not stop at this; we also follow up with our own monitoring, a day or two later.”

Asked to comment on allegations that some of his officials are complicit in illegal practices, Ogunlana said he was not aware of any cases, adding, “I will be very happy to know the identity of any DPR official who is involved. If any of my men are, I shall ensure that they are sanctioned according to the dictates of the law.”